Atlas Second Quarter 2015 Review

Report for the Quarter Ended June 30, 2015

The positive momentum exhibited during the first quarter in most of the portfolio companies of Atlas continued in the second quarter of 2015. Particularly solid performance was delivered by BF Holdings LLC (“BFH”), Finch Paper (“Finch”), Guardwell Distribution LLC (“Guardwell”) and Twin Rivers Paper Company Inc. (“Twin Rivers”) during the quarter. BFH benefitted from steady market conditions and improving operational metrics while Guardwell’s newly acquired Merchants Metals Inc. (now operating as Merchants Metals LLC, “MMI”) got off to a solid start under Atlas ownership. Twin Rivers leveraged solid sales performance, generally good operating execution and a benevolent exchange rate environment to deliver excellent results. ASG Group (“ASG”), Detroit Renewable Energy LLC (“DRE”) and Erickson Framing Holdings LLC (“Erickson”) all showed attractive comparisons with the prior year’s second quarter. Subsequent to our sale of the North American and Asia Print divisions of ASG in the fourth quarter of 2014, the remaining units of ASG are focused on expanding outside of the media packaging market. DRE had a challenging quarter operationally but still exceeded last year’s second quarter.

Erickson continued to show improving results as housing starts in all of the company’s markets sustained their recovery. Soundview Paper Holdings LLC (“Soundview”) translated improving operational trends at the end of last quarter into much improved financial performance in the second quarter, providing evidence that the turnaround of this platform is well underway. Both New Wood Resources LLC (“New Wood”) and Greenidge Generation Holdings LLC (“Greenidge”) continued their development efforts.

Some of Atlas’ companies made good progress establishing control, stability and forward momentum while also undergoing a myriad carve-out and integration activities. Motus Integrated Technologies (“Motus”) began the task of integrating the recently acquired Leon Plastics Inc. (“Leon”) Bolt-on Acquisition (“Bolt-on”), adding further complexity to Motus’ already challenging agenda. Nonetheless, Motus performed well in the quarter and importantly, avoided disrupting any key customers during this transitional period. ACR II Aluminium Coöperatief U.A. (“Aludium”) delivered good results in its second quarter. Novipax Holdings LLC (“Novipax”), acquired through the purchase of the Trays and Packaging business of Sealed Air Corporation (“Sealed Air”) in April, delivered an excellent first quarter under Atlas ownership. Among our primary objectives is to continue to improve safety cultures and safety performance. ASG, RedBuilt, Finch Paper, Motus and Phoenix Services International (“Phoenix Services”) all continued to display strong and improving safety performance.

At the end of the quarter, we announced the completion of the sale of Forest Resources LLC, which we have owned since early 1999. The sale marked a conclusion of a long and successful run in which our investors were substantially enriched and we established lifelong relationships with a committed and talented team of terrific management partners.

At the mid-way point of 2015, we are pleased with the progress of our portfolio companies. There is no shortage of opportunities to improve each of our businesses and importantly, we believe that our management teams are focused on the proper priorities and are highly motivated to succeed. We are particularly pleased that the current environment has facilitated interesting corporate carve-out opportunities that we believe represent compelling value. This period has demonstrated that even when “the good times roll”, we are able to stay quite busy identifying and acting on negotiated transactions without stretching our valuation discipline. We look forward to reporting on some of these successes in future quarters and perhaps some new transaction.


Andrew Bursky
Managing Partner
To contact Andy by e-mail, please click here

Timothy Fazio
Managing Partner
To contact Tim by e-mail, please click here



Arnaud de Weert
Chief Executive Officer

In the second quarter of 2015, Aludium displayed excellent safety performance, posting an RIR of 1.3. The company made significant “carve out” progress during the quarter, selecting vendors for the pending IT transition off of Alcoa’s systems and making a number of key hires across the organization, further solidifying key departments such as finance, treasury and FP&A. Commercially, the company continued to capitalize on the positive market momentum created by the official launch of the Aludium brand during the first quarter. Sales volume increased from the prior year period to approximately 46,900 metric tons. The company’s commercial team maintained its market position in a difficult European market environment during the first two quarters of the year, with consistent levels of higher margin specialty and industrial tonnage. European rolling mills benefited from declining metal prices. Feedback from key customers has been positive, noting high quality, short lead-times and a commitment to serving the core industrial and distribution markets. The company is focused on top-grading mix with existing customers and qualifying new pipeline accounts throughout the remainder of the year as the team prepares to negotiate 2016 volumes.

Operationally, the company began the period with a significant set-back at the Amorebieta hot mill in April, however, Amorebieta’s performance rebounded in May and June. In Alicante, production KPIs were generally strong across the board with consistent performance on key metrics such as on-time delivery, metal recovery and quality. The Alicante team set a new productivity record during the month of June, achieving 254 tons produced per full-time employee. At Aludium’s smaller French finishing facility in Castelsarrasin, it was a solid quarter operationally.

Looking ahead, management will be exploring a number of highly accretive capital projects designed to lower Aludium’s metal costs, including rotary furnace and continuous casting investments, both of which will enhance metal sourcing opportunities for the company and expand margins. Analysis on most of these projects began several months prior to completing the transaction and some of these projects are likely to be initiated prior to year-end 2015.



Mike Jackson

ASG had an improving, but still disappointing, second quarter. While the company achieved an exemplary aggregate RIR of 0.0 in the second quarter of 2015 as compared to 0.4 during the LTM period, its financial performance lagged. ASG generated a smaller EBITDA on revenue during the second quarter of 2015, compared to the same quarter in 2014.

ASG’s Amaray business experienced a decline in profitability caused by reduced media sales. Despite a decline in sales, ASG Print delivered increased profitability driven by cost reductions executed during 2014 and the first quarter of 2015.

Amaray’s decline in revenue was driven primarily by particularly sluggish DVD and Blu-ray volumes in the U.S. and the impact of foreign exchange losses on a softening Euro. Reduced resin pricing in June further contributed to the weak financial performance as the spread between virgin and recycled resin collapsed, increasing resin costs as a percentage of sales. Amaray management is aggressively moving the business into new, growing markets to offset the continuing declines in the company’s media business (which historically has represented most of Amaray’s revenue). On the bright side, Amaray continues to make significant progress in adding non-media customers and has a strong pipeline of healthcare products, electronics and consumer goods packaging closures.

ASG Print enjoyed significant improvement in profitability despite declining revenue. As with Amaray, the decline in revenue was driven primarily by lower media volumes and the impact of foreign exchange. Cost savings from restructuring actions and increased productivity from a new rigid box production line in the Netherlands have enabled significantly improved EBITDA year-over-year despite these revenue declines. Further, ASG Print is much further along than Amaray in its transition from being completely reliant on the media business as the result of its 2014 acquisition of the consumer packaging focused Bydgoszcz, Poland facility from MeadWestvaco. Spark!, ASG Print’s digital prepress and digital asset management business, continues to perform well, with sales in the second quarter up strongly and cost reductions realized from the consolidation of two offices in London into one.


BF Holdings

Don Banker
Chief Executive Officer – Banker Steel

Henrik Krabsen Jensen
Chief Executive Officer – Veritas Steel

BF Holdings LLC (“BFH”), consisting of Veritas Steel LLC (“Veritas”) and Banker Steel Co., LLC (“Banker”), continued to demonstrate strong financial performance but unsatisfactory safety performance in the second quarter of 2015. Regression in safety metrics is attributable to a labor force ramp up at all three Veritas facilities. The company is continuing to refine the onboarding process to attack the higher incident rate generally experienced with new associates. Banker continued to show encouraging improvement in safety since acquisition, reporting an RIR of 6.6 for the second quarter compared to 13.3 for the LTM period. During the second quarter, Banker instituted near miss reporting and also began daily tool box meetings to discuss safety on a more regular basis.

Veritas’ strong operating performance in the second quarter was driven by increased volume and efficiency gains in each of its three facilities. Banker experienced a strong second quarter driven by new work that began fabrication during the quarter. Both businesses are intensely focused on improving operations. At Banker, the team has begun installing business analytics which have already begun to pay dividends, for example, highlighting the costs of re-work. At Veritas, management has focused on its purchasing practices to improve its non-steel costs and to move towards more outsourcing of commodity fabrication.

Both companies continue to add higher margin work to backlog and are focused on winning key new projects. Banker booked $50 million of new business in the second quarter and won several premier jobs in New York City, including Rockefeller University and the esplanade along the East River. Veritas booked approximately $22 million of new business in the quarter with large jobs expanding backlog in Eau Claire, WI and Palatka, FL.

We remain excited about the synergistic opportunities between Banker and Veritas. During the second quarter, the businesses continued collaborating on a large project that will begin fabrication early in the third quarter. Our management teams are operating well, sharing best practices and discussing safety and employee engagement. With a strong balance sheet and an energetic leadership team, BFH is well-positioned for future growth.


Detroit Renewable Energy

Steve White

David Beavens
Chief Executive Officer

The second quarter of 2015 represented the fourth successive quarter-over-quarter improved financial performance for DRE as well as a continuation of exceptional safety results. DRE’s quarter-over-quarter EBITDA improvement was achieved on flat revenues. During the second quarter, DRE had one recordable incident across its business units, which resulted in an RIR of 1.4 for the second quarter of 2015 and an RIR of 0.4 over the LTM period. The continuation of world class safety performance at DRE is a high priority not only for the management team, but also the nearly 250 associates who operate in an environment that is inherently hazardous.

Detroit Renewable Power (“DRP”), DRE’s largest business unit, experienced temporary operational upsets in its boilers’ secondary superheaters during the quarter, resulting in episodic periods of unplanned downtime. As a result, DRP’s boiler system capacity utilization decreased in the second quarter compared to the first quarter of 2015 and Municipal Solid Waste receipts had to be reduced. Two of the three boilers had secondary superheater overhauls during the quarter, contributing to reduce capacity utilization but positioning DRP for excellent operational performance during the critical winter heating season.

Detroit Thermal’s (“DT”) second quarter results were impacted by the inability to consistently rely on purchased steam from DRP as a result of its performance issues. During the colder first and fourth quarters, DT typically demonstrates its strongest financial performance due to the highly seasonal nature of this business. DT’s three most critical KPIs are i) units of steam (measured in “Mlbs”, or thousands of pounds of steam) purchased vs. produced (a measure of the reliability of DRP as a steam source), ii) HDD (Heating Degree Days, a measure of steam demand for heating) and iii) Mlbs sold (a function of HDD and the number and scale of customers). The first KPI drives overall DRE system efficiency and is a fundamental determinant of DRP profitability (when combined with DRP steam sold to GM). During the second quarter of 2015, DT was required to self-generate a higher percentage of its steam requirements using natural gas as compared to the second quarter of 2014, largely because of the performance issues at DRP. In the spring and summer months, we expect to have less self-generation as DRP is expected to be in better position to satisfy the lower demand requirements from DT’s customers and the General Motors (“GM”) partnership. The HDD KPI is outside of the control of our managers; however, this KPI can often create substantial variability in our quarterly results. For the second quarter of 2015, the HDD in Detroit was slightly warmer than the prior five year average HDD for the same period. The third KPI can be directly impacted by management; however, switching to the DT system is influenced by the cost of natural gas. Most typically, these prospects are buildings that are facing major capital expenditures to replace aging boilers as well as new construction.


Erickson Framing Holdings

Rich Gallagher
Chief Executive Officer

Erickson showed significant financial and safety performance improvement in the second quarter of 2015. Erickson reported an RIR of 6.2 for the quarter, an improvement over 8.6 for the LTM period. The company’s RIR was well over 20.0 before the Atlas acquisition and we expect improving safety trends to continue.

Arizona Framing (“AZ Framing”) has begun to experience a more robust housing market, but inadequate labor supply is restricting this unit’s ability to benefit from improved market conditions. Labor performance has degraded during the seasonal construction peak, attributable to Erickson’s hiring of less experienced and less efficient crews to handle the increased workload. We believe AZ Framing is well-positioned in the market and management is focused on improving labor efficiencies through better hiring practices and a new compensation structure that more effectively accounts for labor hours. Erickson’s door molding and millwork business (“DSI”), co‚Äźlocated with AZ Framing, reported a profitable second quarter.

The California Framing division (“CA Framing”, which includes the Nevada Framing operations) had improved results in the second quarter as these markets began to demonstrate much more robust demand. The Reno market has been solid and recent announcements of high-paying jobs coming to the area (e.g. a new Tesla battery factory) should continue to provide positive momentum. Pricing in California was stronger than anticipated and new leadership continues to rebuild market share. Like AZ Framing, CA Framing has been well-positioned for the seasonal pickup and has avoided the efficiency degradation seen in the AZ Framing operation.

Erickson has significant share in some of the most rapidly growing residential construction markets. According to the Census Bureau, Reno ranked #1, Phoenix ranked #7 and Sacramento ranked #9 for year-over-year single family housing permit growth for markets with greater than 500 annual permits. Under Erickson’s strong leadership team, the company is positioned for a bright future.


Finch Paper

Deba Mukherjee
President and Chief Executive Officer

Our YTD recordable incident rate for 2015 is 2.4, down from 3.6 in the first half of 2014, and has improved steadily over the last twelve month period. Our YTD lost time incident rate (LTIR) for Q2 2015 was 1.3 versus 1.1 in the same period of 2014. The implementation of a compulsory safety observation program helped reduce the number of recordable injuries significantly from Q1.

Demand in the domestic uncoated free sheet market continued to decline in the second quarter, contributing to a YTD market decline. Total sales of Finch core grades, however, were up with our top 20 customers during the same period. Although there are market headwinds in a number of product categories, we continue to implement our strategy of product and customer diversification which will continue to improve our mix. We continue to run at full capacity despite a declining industry operating rate.

Operational performance was consistent with Q1 results, although paper mill and pulp mill production was slightly below a strong comp from the prior year. Our cohesive sales plan continued momentum with new customers, new products and markets, while expanding our position in the core markets. This is intended to have a long term stabilizing effect. We have added talent with significant knowledge of our target markets to help increase customer penetration and the rate of account closure. Performance was also improved in the quarter with well-timed procurement efforts to capitalize on advantageous petroleum and pulp markets. Q2 2015 represented the 6th consecutive quarter of trailing twelve month EBITDA growth driven by our focus on safety, quality, productivity and sales diversification. Additionally, we continue to execute our continuous improvement plan that will position the organization to perform regardless of industry conditions.


Forest Resources

Larry Richard
President and Chief Executive Officer

This will be Forest Resources’ last appearance in our quarterly report. On July 2, Forest Resources was sold after more than fifteen years of ownership by Atlas. It was a remarkable run and the friendships that we’ve established with the terrific folks at the various Forest Resources companies will continue long past the closing of the transaction.

Our management team, led by CEO Larry Richard, did an excellent job as we partnered to acquire and integrate several paper and packaging companies, beginning with our initial acquisition of Hartford City Paper in March 1999.


Greenidge Generation Holdings

Dale Irwin
President and Chief Executive Officer

Greenidge Generation Holdings LLC (“Greenidge”) remains idled, but discussions with the New York Department of Environmental Conservation and the Governor’s Office concerning our restart plans continued to make progress. Management remains focused on reinstating the facility’s Title V air permit, and we are considering which fuel configuration will enable the most expeditious restart. We will continue to explore all possible generation permutations to maximize value as we work to return a strategically significant power source to market.



Pat McCauley
President and Chief Executive Officer – Bridgewell Resources

Andrea Hogan
President and Chief Executive Officer – Merchants Metals Inc.

In March, Atlas acquired MMI from Oldcastle Building Products Inc. (“Oldcastle”) and formed Guardwell to hold its interests in both Bridgewell Resources Holdings LLC (“Bridgewell”) and MMI. Guardwell recorded an RIR of 2.9 in the quarter and 2.1 for the LTM period.

Bridgewell experienced a significant transition in the second quarter. In May, management executed a restructuring of company operations to better focus resources on its best performing businesses, exit unprofitable businesses and reduce corporate overhead. This restructuring included the elimination of the Specialty Building Products and International Wood Products divisions, along with the narrowing of focus of the Domestic Wood Products (“DWP”) division. The restructured business is now comprised of four primary divisions: Contractor Direct (“CD”), Utility & Construction (“U&C”), Food & Agriculture (“F&A”) and DWP. Each of these divisions has a solid franchise in its market, sufficient scale to compete effectively and substantial organic growth opportunities. We believe that the more tightly focused Bridgewell will enable management to better allocate the company’s financial and human resources to achieve more rapid growth and superior financial performance.

MMI is the second largest manufacturer and distributor of fencing products and accessories in the United States, with five manufacturing facilities and 39 distribution centers. Atlas acquired MMI at the end of the first quarter of 2015 from Oldcastle as it was deemed non-strategic and its performance had stagnated. A new leadership team led by Andrea Hogan (CEO) and Jeff Matuszak (COO) was deployed to direct the transition of MMI to a standalone business and reinvigorate its growth. Andrea was formerly Vice President of Business Development at Bridgewell and brings a wealth of distribution industry experience. Jeff returned to the Atlas family, having previously served in a leadership role with former Atlas portfolio company Wood Resources LLC. In the short time since acquisition, we are encouraged with the early results from the new leadership team.

MMI performed solidly during its first quarter under Atlas ownership as the new leadership team remained focused on transitioning the business from a division of Oldcastle into a standalone enterprise. Substantial progress was made during the quarter in implementing the basic processes, controls and metrics needed to operate independently. MMI also began rolling out its 80/20 initiative, part of an Atlas-wide program of continuous improvement that disciplines the organization to better focus its capital and human resources on the 20% of activities, products and customers that produce 80% of the value to the enterprise.

In other initiatives, MMI management also introduced a flatter organizational structure and a robust talent identification process. The flatter organization should lead to better communication and more nimble decision making.


Motus Integrated Technologies

Shannon White
Chief Executive Officer

Motus Integrated Technologies performed well both financially and with regard to safety during the second quarter of 2015. High industry wide auto volumes continued to provide a welcome tailwind for the business, but much of the good performance can be attributed to operational improvements implemented by our management team.

Motus’ continued excellence in regard to safety performance was a result of daily Gemba walks throughout the plants, best practice sharing across the facilities and higher levels of overall employee engagement. Motus Ramos delivered its second consecutive quarter with zero recordable incidents – an impressive and noteworthy achievement that highlights the operational improvements implemented by the Ramos team. Leon delivered a somewhat disappointing RIR of 1.5 during the quarter, reflecting four recordable incidents at the Grand Rapids facility during the month of June. Leon’s three plants in Mexico, located in Ramos, Saltillo and Arteaga, each had zero recordable incidents during the month of June. Safety was not a priority at Leon under previous ownership, but our management team is working hard to implement a much needed safety-oriented culture.

Operations continued to improve at Motus during the second quarter. That this improvement was accomplished while two of four Motus sites successfully implemented their ERP IT system migrations, a time consuming and labor intensive endeavor, was particularly impressive. The management team continues to make excellent progress across all of the Motus plants and the intense focus on key metrics during daily production meetings, an important element of the Motus Business system, is yielding tangible results.

At Leon, the operational improvements achieved during the quarter were even more dramatic. The Leon Ramos, Mexico plant achieved 98% on-time delivery in the quarter, critical for regaining the confidence of Leon’s customers following the significant delivery problems that preceded the sale of Leon to Motus. Indeed, the production department has been reorganized to focus on customer service, with daily customer service meetings scheduled to establish customer oriented discipline. On the quality front, Ramos achieved improvements in its PPM metrics relative to the prior month for three consecutive months. This was the result of several initiatives, including a quality focus room being implemented on the production floor, quality and standard boards being placed across the operations and top-grading the talent of the quality department.

On the commercial front, Motus and Leon each had important wins during the second quarter. Motus won the North American Honda Accord sun visor business, the Global Honda CRV sun visor business and the PSA X74 Headliner business. Leon won the Ford F-250 and F-350 cockpit components business as well as the GM Trax business. Together these programs will contribute significant sales once in production and were important wins, demonstrating a welcomed vote of confidence from these customers.

In the ongoing War for Talent, several key hires were made during the quarter, including Tim Heasley as Chief Financial Officer. Substantial progress was made during the quarter on the IT implementation front, with successful ERP infrastructure migration at all facilities and successful ERP system implementation at both Maplewood and Ramos.

Remaining ERP implementations at the European facilities are scheduled to be completed during the third quarter.


New Wood Resources

Kurt Liebich
President and Chief Executive Officer

During the second quarter of 2015, New Wood continued to improve both safety and financial performance. On the safety front, progress continues as New Wood reduced its RIR.

Significantly, Omak posted its first incident-free quarter in its history. For the quarter, New Wood had three recordable incidents, resulting in an RIR of 2.5 during the quarter which reduced the RIR to 5.5 for the LTM period.

New Wood’s financial progress was driven largely by strong profitability at Olympic Panel Products LLC (“Olympic”) which posted solid EBITDA as a result of increased selling prices and a richer mix of higher margin products as compared to the same quarter of 2014. As highlighted last quarter, on March 20, 2015, New Wood sold Olympic to Swanson Group Manufacturing LLC (“Swanson”), a Pacific Northwest forest products company. Ultimately, Swanson intends to relocate the Olympic assets into a new facility currently under construction by Swanson in Oregon. Until then, New Wood is operating Olympic pursuant to an operations and maintenance agreement.

Omak Wood Products LLC (“Omak”), after posting its first positive EBITDA in the first quarter, took a step back as production was inconsistent primarily due to downtime across a number of machine centers and quality issues in plywood assembly. During the second half of the year, new lathe controls are being installed which will assist in providing faster operating speed, improved quality of the log peel and more efficient log utilization. Work remains on the operational front with a focus on employee engagement, training and curbing absenteeism along with the utilization of information systems, processes and metrics to drive informed decision-making.

Winston Plywood LLC (“Winston”) development progress continued. The new plywood manufacturing facility is “coming out of the ground”, installation of the equipment will soon be underway and commercial operations are scheduled to commence in early 2016. During this second quarter, Winston received proceeds from a grant appropriated last October as part of the financial incentive package from the Mississippi Development Authority.



Bob Larson
Chief Executive Officer

Novipax delivered strong financial performance, but disappointing safety performance, during the second quarter of 2015, our first period of ownership. On the safety front, Novipax incurred three injuries resulting in an RIR of 1.4 in the quarter.

Prior to the acquisition on April 1, Novipax was operated as a business line within Sealed Air, with all functions such as sales, customer service, accounting, human resources and information technology performed by shared resources provided by the parent company. As part of the purchase transaction, Sealed Air agreed to provide these functions to Novipax under a Transition Services Agreement (“TSA”) for up to 18 months, at which time Novipax must be able to operate on a fully standalone business. The transition activities have proceeded on schedule and Novipax has already taken over responsibility for functions such as payroll, benefits, sales and customer service. Transition will continue over the next nine months as Novipax moves onto its own enterprise resource planning (“ERP”) system and assumes responsibility for the remaining functions.

The business had been matrix-managed within Sealed Air, without leadership that had full P&L responsibility. One of the highest priorities before acquisition was to establish a senior management team with the skills to manage the company even as we engaged in the “carve-out” activities. Prior to acquisition, we hired CEO Bob Larson, who most recently served as President of the North America Food and Consumer Packaging Division of Coveris, a large, global packaging business. Bob is supported by a Board of Directors led by Chairman of the Board Ron Leach, who formerly was CEO of Tegrant Corporation. Since the acquisition, Novipax has filled out its senior leadership with additional critical hires. The focus of the team for the balance of the year is maintaining stability and successfully executing the carveout without disruption to the business. The new ERP system implementation will demand the full attention of our leadership team. Beyond the transition, we believe there is significant opportunity to improve the business through improved pricing management, operational improvements and smart investments in high-returning capital projects. We remain very optimistic about the future of Novipax.


The Pangborn Group

Henrik Krabsen Jensen
President and Chief Executive Officer

The Pangborn Group had two minor lost time accidents in the second quarter of 2015, both involving finger injuries. Our trailing twelve month recordable incident rate at the end of June 2015 is 2.1. During Q2, new work instructions and new cut-proof gloves were issued to all factory and service workers, and we continued our focus on safety training to ensure safety awareness at all sites.

The implementation of our Continuous Improvement / Lean projects continues to progress. We are focusing on redesigning a number of our equipment solutions, optimizing the production processes in our foundry and applying new approaches to the aftermarket business segment. These and several other activities are being implemented and will yield continuing operational and financial improvements in 2015 and beyond.

Group aftermarket order intake in the second quarter, historically our strongest quarter, increased from the last quarter. While the UK and Germany aftermarket activity was down slightly during the quarter, the result was offset by stronger order intake from our operations in North America, Italy and China.

Overall, the second quarter of 2015 developed better than forecasted and was ahead of our expectations. While the decline in the value of the Euro reduced top-line consolidated sales in Q2 2015, the bottom-line impact was small as a result of our Italian and German operations natural hedge with both their product sales and manufacturing costs denominated in Euros. Overall, lower sales were offset by lower operating costs resulting in a slight increase on return on sales compared to last year.

Market conditions in North America and China continue to be favorable. The European market shows some strengthening, particularly with new project inquiries for equipment replacement and rebuild optimization. Our equipment backlog is at a good level and we expect that the markets will remain relatively strong with Europe improving throughout the remainder of 2015.


Phoenix Services International

Terry Wagaman
Chief Executive Officer

Phoenix Services International LLC (“Phoenix Services”) reported an OSHA recordable rate of 1.7 for the second quarter of 2015, compared to the second quarter of 2014 of 2.2 and the national slag industry standard of 5.0.

Phoenix Services continues to grow internationally. Phoenix signed a new 20-year service contract with CSP (Companhia Siderúrgica do Pecém), a greenfield steel mill under construction in Forteleza, Brazil. The anticipated start date is February, 2016. Also, Phoenix Services’ new site at US Steel’s Kosice, Slovakia facility started in July, 2015, on time and under budget, and the site is expected to outperform plan for the remainder of the year. Phoenix commissioned its new slag sand wash plant for its Burns Harbor site late in 2014. Phoenix shipped its first washed sand by lake boat during the second quarter. This new product will enhance the profit of the Burns Harbor site. Slag sales were impacted by unusually wet weather in the Midwest, while slag sales have been more robust in the East due to increased construction activity. Several contracts were renewed or extended in France and in North America. AMNS Calvert, Indiana Harbor East and NAS Ghent continue to outperform despite a downturn in the global steel business.

Phoenix sites continue to run well across the board with a small downturn in revenue due to reduced steel production. Global steel production continues to drag, running slightly lower on average capacity utilization rate.



Kurt Liebich
President and Chief Executive Officer

The safety of RedBuilt associates is our top priority. In the first half of 2015, three RedBuilt associates were injured on the job, resulting in a recordable incident rate of 1.9, above our target of 1.0. All safety incidents and near misses were investigated, key learnings and trends were shared and corrective actions were implemented across the organization. Our 2015 Safety Plan includes actions designed to increase associate involvement in safety. In alignment with this Plan we have consulted with OSHA in several locations and will use the SHARP certification process to help drive world class performance across the organization.

The overall level of commercial construction activity in our core western markets is down significantly versus last year, driven primarily by California, but also impacted by declines in Washington and Oregon. The AIA’s Architecture Billings Index (“ABI”) and the Dodge Momentum Index continue to forecast moderate improvement in commercial construction for the second half of 2015 and 2016. Despite difficult market conditions, we are making progress in several of our growth initiatives, including gaining market share in the west, the multi-family segment and sales of wall panels.


Soundview Paper Company

Karl Meyers
Chief Executive Officer

Soundview continued its turnaround in the second quarter. On the safety front, Soundview recorded an RIR of zero for the second quarter of 2015, an improvement over 1.0 for the LTM period ended in June, 2015. Management is committed to achieving world class safety performance and continues to drive employee accountability and safe work practices.

Soundview Vermont’s safety performance is particularly noteworthy, as this site’s RIR continues to hold steady at zero for the LTM period, showing remarkable improvement after a full year RIR of 12.7 at the time of the acquisition in 2012.

Financial performance has improved successively over the last three quarters driven by significant cost reductions, but bottom line financial performance remains unsatisfactory. EBITDA in the second quarter of 2015 decreased significantly relative to the prior year, primarily due to a deterioration in sales mix (less converted product sales, more parent rolls) and a lower net converted product selling price. Specifically, converted products pricing and converted product tons sold in Soundview New Jersey were down relative to the second quarter of 2014.

Soundview’s performance is on the rebound as the result of several key initiatives being executed by our new senior leadership team over the past 12 months. Among these initiatives is a reinvigorated Sales and Operations Planning (“S&OP”) process. As a result of this progress, Soundview eliminated outsourcing of all converted products in the quarter, greatly reducing converting costs. Soundview is also leveraging its S&OP process to bid on large converted products opportunities which better match open capacity to the market.

In operations, the paper machines performed consistently and approximated budgeted levels of production for the second successive quarter. Management has improved the fiber blending process, decreasing internal virgin pulp costs on a run rate basis. Energy consumption continues to be an area of focus as new initiatives began lowering energy consumption in the second quarter. Soundview’s new converting labor strategy bore fruit in the second quarter as well, with labor costs in converting declining relative to the prior quarter.

During the quarter, we took steps to further bolster Soundview’s leadership. Karl Meyers was promoted from President to CEO, and Rob Baron, formerly Senior VP of Strategy, was promoted to President. In addition, longtime tissue and paper industry executives, Steve Ziessler and Bob Snyder, have joined Soundview’s Board of Managers. We are confident that these leadership changes and additions will enable the company to accelerate its momentum.


Twin Rivers

Tim Lowe
Chief Executive Officer

Twin Rivers’ RIR during the quarter was 4.2, an improvement relative to 5.3 achieved during the LTM period. Improved safety performance during the quarter at Madawaska, Maine and Plaster Rock, New Brunswick operations was offset by a higher incident rate in Edmundston, New Brunswick.

Twin River’s financial performance in 2015 has been solid, notwithstanding a market environment in North America that continued to prove challenging. Through the first six months of 2015, industry-wide North American shipments of printing and writing grades declined. Sulphite pulp production during the quarter was up over the prior year period, while paper production was down from the prior year period. In uncoated freesheet, North American operating rates (defined as shipments as a percentage of capacity) were down from the prior year period. In coated papers, demand for coated mechanical papers declined, while coated freesheet also declined vs. the prior year period. Despite these market headwinds, the commercial team at Twin Rivers kept all five paper machines in Madawaska sold out during the quarter.

The management team is executing against its plan to protect share in core markets such as religious and pharmaceutical papers while aggressively pursuing opportunities in new product categories, such as sugar packet packaging papers. During the two years since we made our initial investment in Twin Rivers, the company’s product mix has shifted away from lower value-add tonnage into profitable grades serving growing end-markets, under the leadership of the existing management team. Management continues to focus on proactively combatting the long-term strategic challenges posed by Twin Rivers’ largest machine, which has exposure to publishing grades in secular decline. In partnership with management, we are analyzing capital investment opportunities that will expedite Twin Rivers’ transition to markets other than publishing.

The company’s lumber operation in Plaster Rock continues to face challenges. Units sold (measured in Mfbm) increased sequentially quarter-over-quarter. However, Plaster Rock’s average net selling price per Mfbm declined relative to the prior quarter period as a result of both market-related headwinds and internal mix issues. While it has taken longer than originally expected to effect the turnaround of the lumber operation, we remain confident that Plaster Rock will be a key source of value creation over the coming years.


Our Atlas Foundation Partner

Create Common Good

Tara Russell
Founder and CEO

Create Common Good (CCG) uses food to change lives and build healthy communities. We broadly impact communities through our training and feeding programs. We provide job training and employment to a broad base of populations with barriers to employment, youth development programs, and a wide variety of healthy food access programs. Create Common Good (CCG) is a non-profit social enterprise that offers food service staffing talent, food products and food services to institutional food service customers. We differ from other nonprofits in that our goal is to build a sustainable and replicable model that does not rely exclusively on grants and donations to fuel our growing impact model.

In the first half of 2015, CCG trained 62 adults from 15 different community partner agencies serving a wide variety of populations with barriers to employment, and remains on track to double our volume of adults trained and successfully placed into the workforce.

Jacksons continues to be our largest customer, and we remain busy ramping up for production of new convection products, which could easily double their current monthly revenues. While healthy snacks as a category makes up our second largest revenue source, Steph’s Seriously Good Salsa is now our second largest individual revenue source. This has also opened other doors in the food community who now see us both as a producer and packager. As her partner, we are currently working with Steph to test ways to expand her shelf life without sacrificing quality. If successful, Steph will be teed up to reach broader markets and grow exponentially.

Our highlight for the quarter is starting production for Albertsons this week. We’ll be running the pilot at their flagship location in Boise for the first month with the potential to expand regionally to other stores if sales are strong. While we’re only two days into the production, our social media engagement has been blowing up with the partnership announcement.

For more info, check out the Albertsons blog post on our website.

In other news, our founder, Tara Russell, has been busy building her next global social venture, Fathom. Fathom was recently introduced as the 10th brand to Carnival Corporation & plc as a new, differentiated category of social impact travel initially serving the Dominican Republic and Cuba, allowing travelers to combine their gifts, talents and passions with the ability to immerse in and serve needs in the developing world. Learn more at . Tara will remain deeply involved with Create Common Good and continue as Chairman of the CCG Board, driving CCG’s continued growth, expansion and scale.

For more information or to donate, please visit